Page 4 - GLOBAL STRATEGIC MARKETING

because of immigration, and more divided, because income groups have polarized
into rich and poor. Both trends create additional and more distinct customer
segments. At the same time, intense competition and hunger for growth have

pushed, and supply chain innovations have allowed, today’s companies to target
ever more demanding customers within ever smaller segments. The product and
service options available to customers of consumer industries from packaged goods
to financial services have therefore doubled or even tripled.

As sub-brands and line extensions multiply, so do the messages and the media
required to sell them. Twenty years ago, big companies used one advertising spot
on three television networks to reach 80 percent of the US population; now they
need up to 20 messaging and media programs to get the same reach. Marketers do
benefit from some of the new communications vehicles, but since few of them are
scalable as yet, marketing programs have become complex and difficult to measure.
Finally, distribution channels such as the Internet, product resellers, big-box
retailers, and third-party telesales providers have become important for companies
that sell to consumers and businesses alike. Many telecom providers, for instance,
require up to four channels to reach their diverse customer base. The increasing
number of channel choices further fragments their sales efforts while escalating the
potential for channel conflict.

All of these factors, taken together, have dramatically pushed up the complexity and
cost of managing a marketing program just when boards and CEOs have been
pushing their chief marketing officers to improve the return on marketing
expenditures. No wonder more than half of the CMOs we talked with said that a
major restructuring of marketing models will be needed to solve this Rubik’s Cube of
segments, products, channels, and media in a profitable way.

The new model will force companies to change many of their marketing paradigms.

Although customers will still come first, for example, no marketer can meet their
every need. It will be necessary to focus on a few of the available customer
segments and to serve them with fewer brands, lest an ever growing number raise
complexity costs all the way from product development to promotion. In “Making
brand portfolios work,” Stephen J. Carlotti Jr., Mary Ellen Coe, and Jesko Perrey
discuss ways marketers can develop a segment-driven approach to building
stronger, more distinctively positioned brands—and increase the return on
marketing outlays.

Marketers must also address the overall cost of serving consumers and businesses.
In the article “Steering customers to the right channels,” Joseph B. Myers, Andrew
D. Pickersgill, and Evan S. Van Metre argue that proliferating distribution options
have given many companies less control over the way they do business with the